How e-commerce is changing our wallets and the way we pay for purchases

July 25th, 2017

The boost of e-commerce is affecting not only the ratio of online sales and brick and mortar retail store sales, it is affecting the jobs of people in retail and is also having an effect on the payment methods used and on our wallets too.

More consumers are choosing the faster and easier option of shopping online, and according to experts this will lead to the decrease of the overall use of credit cards as well.

Co-branded retail credit cards

Since, the customers are choosing to purchase products online from e-commerce websites rather than their local brick and mortar retail stores, the likelihood of them using the credit cards which they originally opened at their local retail stores is decreasing. The so-called “co-branded” retail credit cards which hold the name of the retailer of choice, but are actually issued by a bank are less likely to be used by the consumers, as they switch to online shopping.

The stores which are visited by fewer customers will naturally attract fewer people interested in getting one of these co-branded credit cards in the first place.

The number of retail jobs being cut in 2017 is expected to increase, and February and March 2017 showed the biggest drop in retail jobs since 2009. A whopping 60,000 cuts were made in the stores in the US just for these two months of the year.

So far for 2017, more than 3,500 stores have been closed, including some major retailers who are shutting multiple stores, including: Macy’s, sears and J.C.Penney.

Chances are that fewer customers will continue using these credit cards issued by their local retailers, and many of them will quit paying off their remaining balance altogether, since they can forget about it altogether or simply let it slide down in their list of priorities for their monthly payments made.

The alternatives to the traditional local retail issued credit cards

At the same time, different e-commerce based cards are beginning to fill this void. One example is the card for Prime subscription members issued by Amazon, which offers a 5% cashback for purchases at Amazon, and doesn’t have an annual fee.

Chase JPM also offers its business customers an Ink Business Preferred credit card with added three points for every dollar for shipping costs.

A possible solution to this problem, according to financial and commercial experts is that the retail stores start offering more benefits to their customers who choose to shop with their store co-branded credit cards, in order to promote their further and increased use.

It is important for people who already have such cards to continue paying their monthly or annual balances, because the interest rate can grow tremendously, and they may end up owing much more money than they planned or spent. The fact is that many of the cards issued by retailers tend to have higher interest rates than the normal general purpose ones, and at the same time have low spending limits.

People who use fewer credit cards are more likely to end up with higher credit scores, and those who fail to pay their retail co-branded cards could suffer a damaged and lower credit scores. This is why it recommended that consumers use no more than 30% of the spending limits of their various credit cards.